DSP FAQs

The MMA was enacted into U.S. law on October 11, 2018, heralding the most significant changes to U.S. music licensing this century. It updates the copyright law to make statutory licensing more efficient for DSPs and to make royalty accounting to copyright owners more accurate and transparent. The MMA created the blanket mechanical license defined in 17 U.S.C. § 115(a) (the “Blanket License”). More information can be found here.

Full details on the MMA can be found here.

he Mechanical Licensing Collective (The MLC) is a nonprofit organization designated by the U.S. Copyright Office according to the historic Music Modernization Act of 2018. In January 2021, The MLC began administering blanket mechanical licenses to eligible streaming and download services (digital service providers or DSPs) in the United States. The MLC collects the royalties due under those licenses from the DSPs and pays songwriters, composers, lyricists, and music publishers. The MLC has built a publicly accessible musical works database, as well a portal that creators and music publishers can use to submit and maintain their musical works data. These tools help ensure that creators and music publishers are paid properly.

More information about The MLC can be found here.

The MMA also provides for the designation of a digital licensee coordinator, tasked with coordinating communication between the DSPs impacted by the MMA, providing feedback on behalf of those DSPs related to The MLC’s operations, enforcing notice and payment obligations of the DSPs related to administrative assessments, and assisting in the collection of each DSP’s share of the funding of The MLC, as determined by federal regulations. The U.S. Copyright Office designated the Digital Licensee Coordinator, Inc. (the “DLC”) to serve as the statutory digital licensee coordinator in July 2019. You can learn more about the DLC by visiting its official website.

The Blanket License covers the making of a digital phonorecord delivery of a nondramatic musical work, including in the form of a permanent download, limited download, or interactive stream.

DSPs who have any questions about their eligibility to operate under the Blanket License, or the obligations they may be required to fulfill even if they do not obtain the Blanket License, are encouraged to consult with their legal counsel.

The Blanket License administered by The MLC became effective on January 1, 2021.

Obtaining the Blanket License does not preclude DSPs from maintaining or entering into voluntary licenses directly with music publishers or other musical works rightsholders. The MMA permits DSPs to continue to license musical works rights directly should they so choose, as long as they provide The MLC with the required written notice and data regarding those direct licenses.

Likewise, for permanent digital downloads and ringtones, record companies may continue to obtain compulsory mechanical licenses on a song-by-song basis, and a DSP may continue to obtain voluntary mechanical licenses from record companies who are authorized and choose to “pass through” mechanical licenses to a DSP.

DPSs should carefully review and complete the applicable Notice of License or Notice of Non-Blanket Activity forms available here.

The applicable annual fee should be submitted along with the Notice of License or Notice of Non-Blanket Activity.

The MLC will notify a DSP of the status of the Notice of License submission within 30 days after the DSP submits a completed Notice of License. If the Notice of License is not rejected, The MLC’s DSP Relations team will contact the DSP and conduct additional informational meetings as necessary.

A SNBL is a DSP that does not obtain a Blanket License, but for which at least one of the following applies:

• Makes available more than 5,000 unique sound recordings to U.S. consumers on any day in a calendar month
• Has more than $50,000 in revenue each month from U.S. activities
• Has more than $500,000 in revenue in the preceding 12-month-period from U.S. activities

A SNBL is required to:

• Send monthly reports of usage to The MLC concerning all Covered Activity (and maintain records of use related to these activities); and
• Pay an allocated share of the assessment for funding of The MLC.

See 17 USC § 115(e)(31) for additional details.

DSPs operating under the Blanket License must report usage data for their services to The MLC.

For complete monthly reporting requirements, DSPs should consult 37 C.F.R. § 210.27(c).

Usage reporting can be submitted in one of the following formats:

• DDEX DSRF. This format is typically preferred by international DSPs, as other CMOs around the world accept this format. This is maintained by DDEX. DDEX DSRF is complicated and if a DSP is not familiar with the format, we recommend they use SURF.
• SURF (Simple Usage Reporting Format). The monthly reports of usage can be submitted in the SURF. This reporting is specific to The MLC and designed to be simple enough to be completed in Excel if necessary.

Click the link below to obtain more information on these specifications.

Specifications, Templates and Guidelines

For complete monthly reporting requirements, DSPs should consult 37 C.F.R. § 210.27(c).

In addition to Monthly Reports of Usage, each Blanket Licensee must submit an Annual Report of Usage due no later than the 20th day of the 6th month following the end of the fiscal year covered by the Annual Report of Usage. This report requires certification by a Certified Public Accountant.

As an example, if a DSP’s fiscal year ends on December 31st, then the Annual Report of Usage would be due by June 20th of the following year.

See 37 C.F.R. § 210.27(j) and 37 C.F.R. § 210.7(g) for additional details.

An Annual Report of Usage is a cumulative statement of account identified in 17 § U.S.C. 115(c)(2)(I) and is required to be delivered by a blanket licensee annually to The MLC under the Blanket License.

The DSRF/SURF files(s) should be provided in the same manner as Monthly Reports of Usage using the naming convention:

"<DSP Name> - <Year> - <Month> - Monthly Report of Usage Under Compulsory Blanket License for Making and Distributing Phonorecords"

DSPs that secure the blanket license established by the MMA will be required to pay mechanical royalties due under that license to The MLC. The MMA also requires that all DSPs contribute toward funding The MLC’s operating costs. The MLC’s operating budget has already been set by The U.S. Copyright Royalty Board, an independent unit within the Library of Congress that is comprised of a panel of three judges. The MLC will collect these contributions directly from DSPs. The obligations to contribute toward The MLC’s operating costs apply regardless of whether a DSP elects to secure the blanket license established by the MMA or not.

The Administrative Assessment is what digital music providers, and any significant non-blanket licensees, must pay to fund the operating costs of the MLC. The Annual Assessment is paid through (1) Annual Minimum fees which are due annually by January 15th of the respective Annual Assessment year (or 30 days from receipt of the invoice from The MLC, if later) as set forth in 37 C.F.R. § 390.3, and (2) Quarterly Allocations which are paid by those DSPs who are allocated an additional share of assessments beyond the annual minimum fee as set forth in 37 C.F.R. § 390.4(a). Quarterly Allocations are calculated by diving the Annual Assessment into four equal Quarterly Allocations, after first subtracting annual fees payable by Flat Fee Licensees (as defined in 37 C.F.R. § 390.1). Quarterly Allocations are due 45 days from receipt of invoice from The MLC. The MLC will invoice Quarterly Allocations for each respective period based upon the reporting for such period received from DSPs as of the time of calculation by the MLC, which calculation time shall not be earlier than the legal deadline for submission of reporting by DSPs for the respective period.

Royalty payments represent statutory mechanical royalties for monthly usage reporting that are payable to copyright holders (publishers, songwriters, and administrators).

Annual Minimum Fees are based on the Unique Sound Recordings count as defined in 37 C.F.R. § 390.1.

For complete annual fee details, please consult 37 C.F.R. § 390.3.

As described in 37 C.F.R. § 210.27(g), DSPs must either submit usage files by Day 15 (to receive an invoice for royalties due) (“Early Path”) or by Day 45 (which is when corresponding royalty payments are due) (“Regular Path”).

For example, if the usage period is January, royalty payments would be due 45 days after the last day of January.

See the Key Dates section of the website for details.

For monthly royalty calculations, please consult 37 C.F.R. § 385.21.

A DSP which submits usage reporting 15 days after the end of the usage period is eligible to receive an invoice prior to the royalties payment due date. If usage reporting is submitted by this date, an invoice will be sent no later than 40 days after the end of the usage period. If a DSP would like to receive an invoice, usage reporting must be sent by Day 15 after the end of the usage period month. If this deadline is missed for any reason, then the DSP is responsible for calculating royalties due.

The MMA established that usage reports and royalty payments must be submitted no later than 45 days after the usage period month. If a DSP chooses the 45-day operational pathway, they would be required to submit compatible usage reporting and royalties payments, by Day 45, based on their calculation of total royalties due.

Yes, DSPs have the option to keep money on account for future royalties (“Funds on Account” or “FOA”).

DSPs can request a Funds on Account invoice from The MLC Finance team (finance@themlc.com). These funds will be held on account until the monthly royalty invoice is issued; from there, the Finance team will apply available funds to the royalty invoice. Any surplus will be left on account and available for future royalty invoices.

For any other questions regarding the FOA process, please reach out to the Finance team.

Pursuant to the MMA and as determined by the Copyright Royalty Board, a DSP will be liable for late fees under U.S. federal law of one and one-half percent (1.5%) per month, or the highest lawful rate, whichever is lower, on all outstanding balances for payment obligations that are not completed by day 45 after the end of the month. A DSP will also be in default under the blanket license and may become subject to procedures that could result in license termination. For late fee details, please consult 37 C.F.R. § 385.3.

Payment obligations will have been completed only when The MLC has received royalty funds and has received accurate usage reporting that allows The MLC to apply those funds for the distribution of royalties. Payments should be completed by all deadline dates.

See the Key Dates section of the website for details.

Deadlines falling on weekends or holidays are not extended to the next business day. A DSP should ensure that usage reporting and payments are complete on OR BEFORE all deadline dates. Compatible usage reporting and associated payments must be received by 11:59pm Central Time.